Foreign Direct Investment

The Ministry of Commerce and the State Administration of Foreign Exchange jointly released the Notice on Further Improving the Administrative Measures for Foreign-Funded Investment Companies (“the Notice”) on Dec 8, 2011. While amending some of the current regulations on foreign-invested investment companies, the Notice also sets some new restrictions.

Continue Reading Loosening Current Restrictions, While Implementing New Ones–Notice on Further Improving the Administrative Measures for Foreign-Funded Investment Companies Issued

Responsive to issues faced with difficulty in obtaining financing by businesses (particularly small- to medium-size enterprises) due to the global financial crisis, State Administration of Industry and Commence officially released Administrative Measures for Corporate Debt-for-Equity Swap Registration (the “Measures”) recently, which formalizes regulation of debt-for-equity swap on the national level. The Measures will be put into implementation on January 1, 2012.

Continue Reading SAIC Issued Administrative Measures for Corporate Debt-for-Equity Swap Registration

The State Administration of Foreign Exchange of the People’s Republic of China (“SAFE”) is the principal gatekeeper for incoming and outgoing investment made in foreign currency. SAFE wields tremendous influence over capital inflows and outflows and, as such, the rules it promulgates can significantly affect inbound investments. Recently, SAFE issued Circular 19, the ‘Operating Rules for the Administration of Foreign Exchange in Financing and Round-trip Investment by Residents in China via Special-Purpose Companies’, an important addition to an existing body of rules and regulations of special importance to foreign investors.

Continue Reading New Developments for Foreign Special Purpose Companies and Round-Trip Investment

According to the Supreme People’s Court, when foreign investors purchase non-performing assets from Chinese firms and collect payments from the original borrower/guarantor it somehow changes the nature of the original guarantee. Consequently, on October 27, 2010, the Supreme People’s Court issued Notice on Trial of Cases Involving Issues of Validity of Guarantee Contracts Related to Use of Foreign Investment by Chinese Companies in Dealing with Nonperforming Assets (the “Notice”) in an effort to provide some guidance on such matters.

Continue Reading China’s Supreme People’s Court Issues Notice on Trial of Cases Involving Transfers of Nonperforming Assets to Foreign Investors

Beginning December 1, 2010, foreign-invested enterprises, foreign enterprises, and foreign individuals are now required to pay the city maintenance and construction tax as well as the education surcharge, from which these entities and individuals were formerly exempt. Prior to this regulation, the PRC levied those taxes only on Chinese-owned and funded enterprises and Chinese citizens.

Continue Reading China Ends an Era of Special Tax Treatments for Foreign Companies and Individuals

In a new effort to bring clarity to regulations on the trial of cases involving Foreign Investment Enterprises (FIEs) in China, the Supreme People’s Court, the country’s highest court, implemented on August 16, 2010 Provisions on Issues Concerning Trial of Cases Relating to Foreign Investment Enterprises (I) (the “Provisions”). The Provisions deal mainly with cases involving such FIEs as contractual joint ventures, equity joint ventures and wholly foreign owned enterprises. The most important of the Provisions concern the following:

Continue Reading New Rules on the Litigation of Cases Involving Foreign Investment Enterprises

78 Centrally administered State-owned enterprises ordered to withdraw from real estate development.

Soon after the NPC (the National People’s Congress) and CPPCC (the Chinese People’s Political Consultative Conference) sessions, during which the top authorities expressed concerns over housing prices and possible intentions to control the property bubble, Beijing’s land prices reached record highs, and the biggies shareholders of the winners in the recent three biggest land auctions were all state-owned firms.

Continue Reading China’s Recent Real Estate Policies

On February 20, 2010, the State Administration of Tax (the “SAT”) issued “Measures on the Administration of Approval and Collection of Non-resident Enterprise Income Tax” (the “Measures”). Non-resident corporations, defined in Article 3, Paragraph 2 of the Enterprise Income Tax Law of China, are governed by the Measures regarding enterprise income tax (EIT) issues. The EIT of representative offices of foreign enterprises is covered by Circular 18 [2010] issued by SAT on the same day. The Measures went into effect of the date of issuance.

Continue Reading China Issues New Rules For Non-Resident Enterprise Income Tax

After Shanghai allowed foreign private equity and venture capital funds to incorporate in Shanghai in August 2008, Beijing recently became another pioneer in giving legal status to foreign investment funds. On December 20, 2009, Beijing Municipality released a circular entitled Interim Measures on Establishing Foreign Invested Equity Investment Fund Management Enterprises (the "Measures"). The Measures are effective as of January 1, 2010, for a trial period of three years.

Continue Reading Beijing Encourages Foreign Investment In Private Equity Fund Management Companies

On December 7, 2009, the Ministry of Commerce and the Ministry of Science and Technology jointly announced their opinions on encouraging technology export ("opinions"). Opinions on encouraging technology export focus mainly on three areas: implementing preferential policies, closer international cooperation and improvement of the related public administration. The aim is to support enterprises in their export of well developed industrial technologies.

Continue Reading China Issues Opinions on Encouraging Technology Exports